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According to the latest report, the real estate markets of Los Angeles and Orange County have grown to such a degree that property prices have skyrocketed, making the areas the least affordable in the United States. These conclusions were taken from figures by Zillow, an online real estate database. Based on the trend, investors can expect home prices to increase by 5.7 percent in 2015.
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Based on Zillow’s data, Los Angeles homeowners spend around 47.9 percent of their income just to pay for a median-priced rental apartment, and 42.6 percent to afford a median-priced house. While Los Angeles tied with San Francisco last year in terms of general house market prices, the rate of expansion for the California county has been faster than other cities and states. Prices have grown so much that people from middle-class households are feeling the pinch.
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Perhaps the effect can be attributed to the income-price ratio. After all, housing prices in the county are not as high compared to other cities such as New York, Boston, or Washington. However, people who live in these areas generally earn more than the average Californian. Zillow computed that the average household income for families in San Francisco in the second quarter was $76,239, while families in the LA-O.C. area survived on a mere $59,424. Despite the almost $20,000 income difference, families in Los Angeles are paying the same rates as those renting in these three cities.
Still, the rapid growth is seen to be beneficial for the community as it will spur local job growth. Real estate investors and analysts agree that more time is needed to fully access the effects of this sudden expansion.
Jeff Yarbroughhas helped hundreds of clients in Los Angeles find a home within their budget. Learn more about his real estate experience and expertise here.
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